South Korean won, Thai baht firm on hopes US trade deals still salvageable
The won appreciated as much as 0.7% against the US dollar, recovering from a two-week low hit the previous day.
The baht pared overnight losses to firm 0.5%.
Trump on Monday began telling trade partners that sharply higher US tariffs would start on August 1, extending a July 9 deadline while hinting at opportunities for additional negotiations.
Tariff rates on both South Korea and Thailand remained unchanged from the ones announced on April 2, at 25% and 36%, respectively, effectively extending the grace period on implementing reciprocal tariffs.
Officials from both countries plan to intensify their engagement with the US to strike a better deal ahead of the August 1 deadline.
South Korean won strengthens on broad dollar weakness
Thailand's finance minister expressed surprise at the tariff rate but said he was confident the country would secure a lower levy.
But market participants remain cautious as tariff rates remain effectively the same as those announced in early April, and doubts remain whether the short window till August 1 would yield more deals than the 90-day tariff pause period.
The 'modest reaction (in FX markets) is perhaps a function of the market pricing in the ability to negotiate down tariffs, or perhaps a continuation of the TACO trade (Trump Always Chickens Out),' said Michael Wan, a senior currency analyst at MUFG.
Investors in Asia will also be looking at how countries negotiate Washington's crackdown on trans-shipments of Chinese goods, considering their significant exposure to China via supply chains and investments.
'ASEAN economies such as Malaysia, Thailand … are intimately linked via supply chains and FDI (foreign direct investment) to China,' said Vishnu Varathan, head of macro research for Asia excluding Japan at Mizuho Securities.
'The US probably has further to go on China isolation attempts, and Beijing's prerogative to respond cannot be dismissed. And so, uncertainty driven but not limited by tariffs, is likely to be prolonged, not quickly fizzle.'
South Korea's KOSPI index jumped more than 1% while stocks in Thailand opened nearly 1% lower but quickly pared losses.
Indonesia's equity benchmark and its currency, the rupiah, slipped marginally in early trade. The country faces a 32% tariff rate - same as that announced on April 2 - though it comes despite Southeast Asia's biggest economy offering near-zero duties on US imports and a $34 billion deal in the offing.
An MSCI index of global emerging market currencies was largely flat, while a gauge of equities in emerging Asian countries ticked higher.
Singapore's FTSE Straits Times index set a new all-time high for the fifth consecutive session, driven by robust inflows into major banking stocks. Its dollar continued its recovery after hitting a near 12-year low earlier this month.
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